Speculators Lose Big as CBN's New Move Crashes Dollar Exchange Rate
- The value of the Nigerian currency improved against the United States dollar in the official foreign exchange market
- Thursday's exchange rate continued the positive trend for the naira over the past few days, following the CBN's introduction of the FX Code
- The FX Code is expected to boost liquidity, providing the necessary funds to ease pressure in the FX market
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Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
In the last few days, the value of the dollar has crashed against the naira significantly across foreign exchange (FX) markets.
The strong performance of the naira follows the Central Bank of Nigeria's launch of the FX code in the Nigerian Foreign Exchange Market (NFEM) and also efforts made to clear outstanding dollar debts.
Source: Getty Images
The Central Bank of Nigeria (CBN)'s new Foreign Exchange (FX) Code is designed to boost liquidity, enhance transparency, and provide guidance to market participants in Nigeria's FX sector.
This code embodies globally recognised principles that promote best practices within the international foreign exchange market.
In its regulatory capacity, the CBN developed the FX Code to mitigate risks in Nigeria’s dynamic financial environment, while reinforcing the integrity and efficiency of the FX market.
During the launch, CBN Governor Yemi Cardoso emphasised that exchange rate stability remains crucial to Nigeria’s macroeconomic health, impacting key indicators such as the balance of payments, external reserves, international trade, inflation, economic growth, and foreign investment.
Cardoso also mentioned that the forensic audit of the $7 billion FX backlog, which he inherited upon assuming office, is nearly complete. He assured that the final settlements of legitimate FX liabilities to investors would be processed as required.
Recent moves by the CBN moves have created a positive feeling around the naira.
Naira exchange rate
In the official market, for the first time in months, the value of the naira traded below N1,500/$.
Data from FMDQ Securities showed that on Thursday, January 30, the naira closed trading at N1,485.95 per dollar.
The exchange rate on Thursday is a significant improvement from the N1,510.72 quoted by traders on Wednesday, January 29.
Speculators lose big
In the black market, currency traders also suffered massive losses as the dollar exchange rate fell to N1,615/$ selling rate and N1,600 buying rate.
BDC trader Abudulahhi explained:
"There is some panic among those of us who bought dollars at high rates from the street. It is no longer very attractive to buy dollars because you can't predict the exchange rate at which you will sell later."
BDC operators recapitalisation deadline
Earlier, Legit.ng reported that BDC operators have started discussions on mergers and acquisitions to meet the recapitalisation deadline set by the CBN.
The CBN set a deadline for June 3, 2025, for BDC operators to recapitalise or risk losing their licence
In an exclusive chat Aminu Gwadabe, president of the ABCON said BDCs are determined to make it happen.
Proofreading by Nkem Ikeke, journalist and copy editor at Legit.ng.
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Source: Legit.ng
